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FORM
Small Business Capital Company
Report for Investors 527-A
A copy of this form must be enclosed with the investor’s income tax return if the credit is claimed.
This form must be furnished to the investor by January 31st. See instructions for further information.
Address
Year Amount
(a) 2006 $
(b) 2007 $
(c) 2008 $
Note: The amendments to the Small Business Capital Credit made by Senate Bill 1577 of the 2006 Legislative Session
are reflected on this form. Any person or entity that has obtained a favorable determination letter from the Oklahoma Tax
Commission prior to March 15, 2006, regarding the ability to claim or otherwise utilize the Small Business Capital Credit
shall not be subject to these amendments to qualify for the credit except as provided for herein. Notwithstanding any
determination letter issued with respect to such investment, no credit shall be allowed unless:
1. Such qualified investment is made prior to November 1, 2006, to satisfy a legitimate business purpose of the
entity receiving such investment which is consistent with its organizational instrument, bylaws or other
agreement responsible for the governance of the business venture;
2. The investor’s funds were at risk; and
3. The investment was not made chiefly for the purpose of reducing tax liability.
If you are not subject to these amendments; use the instructions from the 2005 Form 527-A. Any investment in a
qualified Small Business Capital Company or an Oklahoma Small Business Venture that occurs on or after November 1,
2006, shall be subject to these amendments and shall use the instructions on the 2006 Form 527-A.
Note: If a pass-through entity is entitled to the credit, the pass-through entity shall allocate such credit to one or more of
the shareholders, partners or members of the pass-through entity; provided, the total of all credits allocated shall not
exceed the amount of the credit to which the pass-through entity is entitled. The credit may only be claimed for funds
borrowed by the pass-through entity to make a qualified investment if a shareholder, partner or member to whom the
credit is allocated has a legal obligation to repay the borrowed funds but the allocation may not exceed such
shareholder’s, partner’s or member’s pro-rata equity share of the pass-through entity even if the taxpayer’s legal
obligation to repay the borrowed funds is in excess of such amount.
Instructions and Guidelines for Preparing
Small Business Capital Company Report for Investors
(Continued)
Column 4:
List the amount of such credit eligible to be claimed this year. The credit for investments made in a Small Business
Capital Company may only be claimed for a taxable year during which such company invests funds in an Oklahoma
Small Business Venture and the credit shall be allowed only for the amount of the funds invested in such venture. The
credit for investments made in conjunction with the Small Business Capital Company may be claimed in the year in
which such investments were made.
Credits
There shall be allowed a credit equal to 20% of a qualified investment in a qualified Small Business Capital Company
which is subsequently invested in an Oklahoma Small Business Venture. The credit may only be claimed in the tax year
in which the Small Business Capital Company makes the qualified investment in an Oklahoma Small Business Venture if
the funds are used in pursuit of a legitimate business purpose of the Oklahoma Small Business Venture consistent with
its organizational instrument, bylaws or other agreement responsible for the governance of the Small Business Venture.
If the tax credit exceeds the amount of tax liability, the amount of unused credit may be carried forward for a period not
to exceed three years.
There shall also be allowed a credit equal to 20% of the investment in Oklahoma Small Business Ventures in conjunc-
tion with qualified investment in such ventures made by a qualified Small Business Capital Company. To qualify for the
credit, a qualified investment shall be:
1. Made by a shareholder or partner of a qualified Small Business Capital Company that has made a qualified in-
vestment in an Oklahoma small business venture;
2. Invested in the purchase of equity or near-equity in an Oklahoma Small Business Venture;
3. Made under the same terms and conditions as the qualified investment made by the qualified Small Business
Capital Company; and
4. Limited to the lesser of:
a. 200% of any qualified investment by the taxpayer in the qualified Small Business Capital Company, or
b. 200% of any qualified investment made by the qualified Small Business Capital Company in the Oklahoma
Small Business Venture.
If the tax credit exceeds the amount of tax liability, the amount of unused credit may be carried forward for a
period not to exceed three years.
The credit shall be allowed against income tax imposed by Section 2355 or the bank “in lieu” tax imposed by Section
2370.
No credit will be allowed for qualified investments made prior to January 1, 1998 nor for the same qualified investment
for which a Rural Small Business Capital Credit is claimed under Section 2357.73 or 2357.74.
Recapture
The Oklahoma Tax Commission is authorized to recapture the credit if it finds that the transaction does not meet the
requirements of the Small Business Capital Formation Incentive Act.
Reporting Requirement
The Small Business Capital Company must furnish this form to the investor by January 31st of the year following when
the investment becomes eligible for the credit. A copy must be enclosed with the investor’s income tax return if the
credit is claimed.